Obama calls for united front at G20

US president sees "glimmers of stabilisation" in major economies ahead of London summit.

31 Mar 2009 12:20 GMT

Protests have already started in London ahead of the G20 summit [AFP]

The US leader said his objective for the G20 summit was to get leaders to take a "robust approach to stimulus", deal with toxic assets in the financial system and agree on regulatory reform to keep such a crisis from occurring again.

Obama, who leaves on Tuesday for his first extended trip abroad since becoming president in January, played down differences with European leaders over whether more government stimulus was needed.

The president said he had agreed the leading economies needed to build a new financial regulatory structure and co-ordinate on fiscal stimulus.

"The press has tended to frame this as an 'either/or' approach," Obama said. "I have consistently argued that what is needed is a 'both/and' approach.

"We need stimulus and we need regulation. We need to deal with the problems right in front of us and we also need to make sure we are taking steps to prevent these types of breakdown from happening again," he said.

'Systemic risk'

Obama said regulatory reform would include discussing what to do about offshore tax havens, which he said were an issue because it was important to ensure everyone was playing by the same rules.

"We're seeing glimmers of stabilisation in the economies"

Barack Obama,US president

"We don't want people to be able to game the system or circumvent regulated capital markets," he said, adding it was important to make "sure our regulations are targeting not just banks but any institution that could pose a potential systemic risk to the system".

Obama also suggested leaders at the G20 summit might stop short of promising to continue their stimulus spending measures into 2010, as urged by the International Monetary Fund.

"There is legitimate concern that most countries already having initiated significant stimulus packages that we need to [first] see how they work," he said.

While he called on leaders to take "serious steps" to address toxic assets on their domestic banks' balance sheets, he acknowledged that a backlash against spending in the US could make it difficult for him to obtain additional funding for banks.

"In all countries there is an understandable tension between the steps that are needed to kick-start the economy and the fact that many of these steps are very expensive and taxpayers have a healthy scepticism … particularly when it is perceived that some of the money is being spent not on them but on others who they perceive may have helped precipitate the crisis."